App servers - what you should know, what you should do

What are application servers? Why are they so important now? Who should you buy them from and for how much? Sonya Rabbitte answers some basic questions...

Even in these hard times application servers are a must-have technology. In a recent survey by AMR Research 75 per cent of companies said they are budgeting for them and 22 per cent said the technology ranks in their top three investments.

Yet on the flip side, Gartner Group claims too many companies are spending too much on application servers without reaping adequate benefits.

The analyst house estimates reckons companies globally have overspent $1bn on application server technology since 1998 - and are set to waste a further $2bn on the same technology by 2003.

The research claims vendors are pushing users into buying high-end technology they just don't need. And users - confused by the hype - fall for it.

Gartner estimates that by 2003 at least 70 per cent of new applications will be deployed on high end application servers.

But what of those who don't need high-end offerings? What should users look for in application server technology?

It won't be a big black box. "The term server is over used and confusing. People think of servers as hardware," said Alan Lawson, research analyst with the Butler Group.

A heavy traffic load is an essential prerequisite to investing in the technology, said Lawson. "You have to have the right amount of traffic on the web server. Think about application servers if you have lots of mission critical applications or if your applications don't mesh well or if they are using too much bandwidth."

Users should also look out for significant differences in price - a factor that can contribute to the overspend noted by Gartner.

While the analyst houses seem to agree that at a technical level application servers are very similar, vendors are quoting vastly different prices, depending on which end of the market they target and what extras they bundle with them.

This additional functionality can include integration adaptors, directory servers, portals, business intelligence applications and business process management as well as caching, personalisation and development tools. But it all comes with a price tag.

For example, HP offers a basic technology for $5,000 per processor, while BEA and IBM are selling application servers - albeit it with deeper functionality - for $10,000 to $20,000 per processor.

But Peter Urban, senior analyst with AMR, said prices can rise as high as $40,000 per processor, with implementation costs jumping to four times that.

However, somewhat surprisingly, AMR claims users are more likely to base their buying decision on their previous experiences with vendors - good or bad - and not on price.

One fifth of users surveyed by AMR said they choose application servers based on the technology's ability to leverage existing skills, although at 16 per cent, cost came a close second consideration.

While the market at the moment includes small players such as Sybase and Silverstream, or those not traditionally associated with application servers such as HP and Sun, AMR predicts four players - BEA, IBM, Microsoft and Oracle - will control the market as it matures.

In 2002, IBM boosted its market share to 31 per cent, passing BEA for the first time. It was left trailing in second place with 27 per cent.

Oracle ranked third with 13 per cent, while Sun and Microsoft held joint fourth place with 12 per cent market share each.

But AMR's Urban advises customers of smaller players not to let the more impressive market share of bigger companies sway their buying decisions. He said: "Stick with vendor allegiance. You're familiar with them. Your people know how to use them. Just because someone like Sybase isn't going to be one of the top four players doesn't mean they're not still a stable company."

Butler's Lawson said users should look out for two main features: scalability and portability. The latter means if users write a Java program on one application server it should be able to be moved to another without any trouble.

But once users choose the application server what exactly do they use it for? AMR claims 94 per cent of buyers use their servers to build custom designed applications.

The sort of programs businesses run on application servers vary. Most common are self service tools designed to let employees administer certain procedures such as processing their own expenses or tackling their own IT support. Payroll and supply chain management also rank highly, according to AMR.

The good news - for application server vendors, at least - is that the market is on the up again, after a slowdown over the past few years.

Analyst house IDC predicts a peak by 2003, as the adoption of standards such as J2EE, SOAP and UDDI helps make the application server a mainstream technology.

But as vendors struggle to win customers in an increasingly cut throat market, price and functionality differentiators are set to become even more of a minefield for customers to negotiate.